Oil prices extend losses on growing concerns of delayed OPEC+ meeting; Brent at $80/bbl

Brent crude futures were down $1.40, or about 1.7 per cent, at $80.56 a barrel after falling as much as 4 per cent on Wednesday. US West Texas Intermediate crude slid $1.37, also about 1.4 per cent, to $75.73 after dropping as much as 5 per cent in the previous session, according to news agency Reuters.

Also Read: India’s crude oil output up 1.3% to 2.5 MMT in October, imports rise after four months of declines: PPAC

Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a December 18 expiry, was last trading lower by 0.17 per cent at ₹6,352 per bbl, having swung between ₹6,287 and ₹6,208 per bbl during the session so far, against a previous close of ₹6,363 per barrel.

India produced a total of 2.5 million metric tonnes (MMT) of crude oil in October 2023 – registering a growth of 1.3 per cent compared to the year-ago period, according to Petroleum Planning & Analysis Cell (PPAC).

India’s crude oil imports rose in October, after falling in the previous four months, as the world’s third biggest oil importer and consumer shipped in more fuel to meet winter demand. According to PPAC data, crude oil imports increased by 2.2 per cent during October, compared to the corresponding period of the previous year.

What’s weighing on crude oil prices?

-The delayed OPEC meeting next week will be held online instead of in-person as the oil cartel wrangles over production levels amid a slump in oil prices. Saudi Arabia and its allies are embroiled in a dispute over output quotas for African members.

-The meeting of OPEC+, which includes Saudi Arabia, Russia and other allies and members of the OPEC group of oil-producing countries, had been expected to consider further changes to a deal that already limits supply into 2024, according to analysts.

-Earlier this week, Bloomberg News reported that the OPEC+ meeting could be delayed for an unspecified period of time after Saudi Arabia expressed its dissatisfaction with other members about their output numbers. Analysts had predicted before the delay that OPEC+ was likely to extend or even deepen oil supply cuts into next year.

-Both Brent and WTI oil benchmarks have fallen for four straight weeks on demand concerns. Brent is down from near $98 in late September – pressured by rising supplies and concern about demand and a potential economic slowdown.

-The two oil contracts had climbed about 2 per cent on Monday after analysts speculated that OPEC+ will extend its voluntary oil output cuts till the first quarter of 2024, in order to support prices.

Also Read: From $89 to near $100 and back: How Brent crude moved since last Diwali over OPEC+ cuts & more

Where are prices headed?

 Disagreements among OPEC+ members regarding additional output cuts contributed to the downward pressure on crude oil prices. The US weekly inventory data also played a role in the decline, with crude oil inventories increasing by 8.7 million barrels in the past week, surpassing the expected 0.9 million barrel rise, said analysts. The dollar index rebounded from a three-month low, exerting downward pressure on oil prices. 

‘’Anticipating ongoing volatility, we project that crude oil prices will remain unpredictable. The support for crude oil stands at $75.30–74.40, with resistance at $77.00-77.70 for today’s session. In terms of Indian Rupees (INR), crude oil finds support at ₹6,300-6,230 and faces resistance at ₹6,460-6,540,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

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Updated: 23 Nov 2023, 10:29 PM IST